The latest SME Pulse survey from Atom bank, covering Q2 2025, revealed a 7% drop in the proportion of respondents who had seen an increase in appetite from their commercial clients, despite 46% still seeing a rise in appetite.

While there has been a slight uptick in the proportion of brokers reporting a fall in demand (5%), the biggest increase was in the number of brokers who saw no change (49%, up from 44%).

The majority of respondents who noted a slowdown in lending (75%), cited economic uncertainty as the main reason for the drop in demand.

Broker also expressed growing concerns over inflation, with 35% saying it was reducing confidence among their commercial clients in undertaking new purchases or refinancing existing ones.

Property purchases remained the most common purpose for SME borrowing, with 64% of respondents citing it as the main driver ahead of growth and business expansion (16%) and refinancing existing debt (14%).

In terms of access to funding, 20% of brokers reported it difficult to secure funding for SME clients, the lowest amount since the survey launch in 2023.

28% of brokers reported seeing increased demand from property investors for funding in order to support expansion in the PBSA sector, while 22% suggested that PBSA now accounts for between 10% and 20% of their business.

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When asked about tariffs, 24% of brokers reported concern among their clients, though 46% said their clients were completely unfazed by the situation.

Tom Renwick, head of business lending at Atom bank, commented (pictured above): “The current economic climate, marked by persistent uncertainty, understandably is contributing to a perceived softening of demand among brokers.

“However, it's crucial to highlight a key finding: a minimal number of brokers have reported an actual decline in demand. This distinction underscores the inherent robustness of the market.

“Despite challenges such as elevated inflation and potential tariffs, a significant number of businesses remain confident in their ability to pursue ambitious growth strategies.

“It’s also particularly encouraging to see access to funding improving.

“This is the strongest position brokers have reported since we launched the Pulse survey and shows that lenders are striking a better balance in delivering criteria which truly meets the needs of a broader number of SMEs.

“Nonetheless, that one in five brokers are still having issues shows there is a clear imperative to further open up funding avenues for quality SMEs, especially considering that certain sectors face persistent challenges in raising capital.”